As you can see from our information page, a Chapter 13 bankruptcy case is a form of debt consolidation. It allows you to reorganize your debts so they are easier to repay, and in some circumstances can reduce the overall amount of debt that is actually repaid. However, one of the aspects of a Chapter 13 case that can cause people worry or hesitation is the fact that a typical Chapter 13 bankruptcy can last for 3 to 5 years.
Life can change dramatically over that length of time. So, naturally, people worry about being locked into a “payment plan” for that long a time. The drafters of the Bankruptcy Code understood that this might cause concerns for many people, so Chapter 13 also includes the flexibility to modify your plan after it has been filed. As long as you stick to a few basics, an experienced Bankruptcy attorney can usually modify your Chapter 13 case to accommodate a change in circumstances.
Modifying a Chapter 13 Bankruptcy
However, with all of that being said, every bankruptcy case is very fact-specific. Changing one aspect of your situation can result in very big changes in you case. So while you shouldn’t be worried about being stuck with an inflexible plan, you should also keep in mind that any change needs to carefully planned out. Otherwise you may inadvertently cause problems with your case in the future.
Modification is a process that must be approved by the Court. When your Chapter 13 case begins, it must be approved by the Court through something called a Confirmation Order. The Confirmation Order essentially locks your case into place and sets out the terms of your Chapter 13 plan. The only thing that can change a Court Order is another Court Order. So any modification will usually require you to appear in Court to explain your situation to the Bankruptcy Judge.
If you request a modification the Court can review your entire situation, and the Court will often asked for updated payroll information and other financial details. The Court also has the ability to modify your case in different ways. The most common modification is probably a change in your monthly payments. If you have had a drop in your income then you may be able to get your payments reduced. However, if you miss payments the Court may increase your payments going forward so that your case will complete in the same length of time. Alternatively, if you can’t afford the higher payment, you can request that the length of the case be extended to keep your payments the same. In some situations it is even possible to reduce the length of your case so you can pay off your debts and get out of Bankruptcy faster.
At Bond and Botes, we handle all aspects of Chapter 13 case from start to finish and beyond. Our experienced attorneys can meet with you throughout your case to discuss changes you have and any possible options to make your case successful. If you’re considering filing a bankruptcy case or would just like to discuss what your options are, please feel free to contact any of our convenient offices in Alabama, Tennessee, or Mississippi. We offer free initial consultations to help you get back on track financially.
Nick Gajewski is an Associate Attorney at the Bond & Botes Law Offices in Florence and Haleyville, Alabama. He holds a Bachelor of Arts from the University of Alabama, and a Juris Doctorate from the University of Alabama School of Law. Nick joined the team of Bond & Botes bankruptcy lawyers back in 2014 and has been helping clients navigate financial issues since. Read his full bio here.